How To Raise Funds In The Evolving VC Landscape

Venture capital is a hot subject for any startup. Having enough of it can be one of the factors that determines whether or not your business takes off. With new startups emerging all the time, understanding venture capitalists and what they’re looking for is important for any entrepreneur who wants to stand out and lock in funding.

That’s part of what makesentrepreneurship eventslike The Montgomery Summit valuable. I attended the event and noted down points that I thought would be valuable to readers. Here are some of the recommendations that experts in VC and fundraising shared at the event:

1. Clearly communicate your goals and expertise.

Scott Thorogood is a serial entrepreneur who has been successful in securing financing for his initiatives in biotechnology and cybersecurity. According to Thorogood, there is more available venture capital than there are quality deals that meet strict VC investment criteria. The key will be to differentiate yourself by avoiding pitfalls during the business plan development process.

Securing the financial and human resources you need to build and execute your plan will require you to communicate your expertise in a way that investors can actually grasp. He said engineering founders in particular should quickly associate with a business team that can translate their complicated technical jargon into terms that can be understood by investors. He also recommends getting industry subject matter experts involved as advisors to fill knowledge gaps and add credibility to the founding team.

2. Don’t just choose any fund out of necessity.

Nitin Rai runsElevate Capital, a fund that invests in underserved entrepreneurs, including women, minorities, and communities of color in the Pacific Northwest, who historically have lacked access to early-stage capital. Rai says founders need to do their homework on which funds focus on which types of market potential. Don’t waste time talking to the wrong investors.

Entrepreneurs should curate investors as much as investors curate entrepreneurs, and they can start by focusing on getting good mentors. Find investors who are intentional about investing in your product, market, space, and region. They’ll lead you in the right direction and ensure you aren’t wasting your time.

3. Practice transparency in your partnership.

Jamie Coleman oversees the assets of a family office that focuses on allocating assets for startups they invest in, rather than telling those startups what to do. He suggests entrepreneurs be very open and transparent about things that arenotworking — but make sure to explain the details of how they’re going to fix it.

For example, don’t say, “Our data is proprietary, so I can’t tell you how it works.” Pull back the curtain and show investors what you’re doing. That’s what will excite them and help them get to know your company, making them more inclined to back it financially.

The frequency of that kind of transparent communication matters, too. Coleman explains that many investors expect startups to share knowledge on a weekly basis, and anything less tends to make them feel left in the dark. Think about it: Their money is invested in your company. The least you can do is give them updates that make them feel like a part of the team.

4. Get creative.

Artem Burachenok, a partner atFlint Capital, an early-stage fund starter that focuses on Israeli and Eastern European founders building enterprise software, cyber, and fintech companies in the U.S., says to show your unique insights into a specific market and demonstrate a creative approach to something in your strategy. Ditch the “Uber for X” pitches. Your company is its own entity with its own strengths, and this kind of comparison does it a disservice.

If you want to create excitement about your company, you have to stand out from the rest. Startups are popping up left and right, so differentiation is key. The best way to achieve that is through a creative pitch that knocks investors’ socks off.

5. Build brand equity.

Scott Porter, partner andEntrepreneur Of The Yearprogram director at EY, says building brand equity is a key factor. One great way to get on the radar of potential investors is through reputable awards programs and media opportunities. When you think about the founders and CEOs who have won the Entrepreneur Of The Year award long before their companies took off, it’s truly impressive to see their growth trajectory and success.

While raising funds and securing investors can be a challenge, it’s still a good time to be a creative, selective startup. Don’t forget to reach out for help and follow the suggestions of other successful entrepreneurs.